In making investment deceision, The Board of Directors of Pax South Africa endorses the Code of Corporate Practices and Conduct recommended in the King II Report. The Board recognises that corporate governance is a developing process. Accordingly, it reviews the degree of compliance with the Code on an ongoing basis and implements procedures to ensure further compliance where appropriate. The risk management process is fundamentally based on the skill and calibre of the team,
Performance risk, including strategic risk, opportunity risk, reputational risk, liquidity risk, and also risks relating to corporate governance, social and environmental responsibility and stakeholder relations.
Investment risk inherent to existing investments. The Board has delegated the responsibility for investment risk management to the Management Committee.
These reviews include, inter alia, verification of intellectual property rights, management competency, business plans, market analyses, contractual rights and obligations, product feasibility, cash flow and liquidity requirements. Consideration is also given to ensure that the investment is optimally structured, using appropriate investment instruments.
Performance of operational management, measured against budgets and other measurement criteria, is regularly appraised for timely corrective action, when deemed appropriate.
Operational risk which includes operational effectiveness and efficiency, safeguarding of assets, compliance with relevant laws and regulations, reliability and integrity of reporting, effective operational risk management, human resource risk, technology risks, business continuity and risk funding.
Operational risks are managed mainly by means of internal control. This is a process designed to provide reasonable assurance regarding the achievement of organisational objectives and to reduce the possibility of loss or misstatement to accepted levels. The effectiveness of risk management is measured by the level of reduction of the Company’s cost of risk.
Management structures have been established to focus on certain key risk activities, including safety, health, environment, asset protection, tax and risk funding.
Treasury risk. Pax has a dedicated treasury function whose responsibility it is to manage risk associated with interest rates, compliance, liquidity, as well as financing and foreign exchange transactions in accordance with a written mandate.
The Board has documented and implemented a comprehensive risk management system, which incorporates continuous risk identification, assessment, evaluation, and internal control embedment.
The Board influences the control environment by setting ethical values and organisational culture while ensuring that management styles, delegated authorities, business plans and management competency are appropriate, effective and efficient.
The Board also monitors the effectiveness of governance structures implemented by the boards of those entities it invests in.
Risk funding is focused strategically on a self-insurance methodology aimed at reducing the group’s cost of risk, save for those risks which cannot be cost-beneficially controlled or have potential catastrophic exposures.